Friday, February 20, 2015
OUR VIEW
EDITORIAL ELECTION GARBAGE UK STYLE
There are a lot of stupid editorials in media around the globe everyday. One of the latest and dumbest appeared in the Financial Times, "Britain's parties should be funded by the state."
With an upcoming general election slated for May, concerns grow about private political donations or, in more crude terms, buying political sway.
Citing a recent report from the so-called independent Election Commission, the editorialist laid out how two groups, business on the right and unions on the left, the two parties are "boosting their coffers."
Why the concern, so asks the writer, because "the main parties are becoming more reliant on a small number of donors to meet their funding needs." The implication here is that this represents something new. It doesn't, not in the UK or the U.S.
Undue political influence, so the claim goes, of individual donors is the risk. The study highlights how narrow the pool of big donors is becoming. To wit, more than half of the funds over the last decade went to Tories and three-quarters to Labour where these so-called grants, more crudely known as bribes, of £50 000 ended up.
Then this brilliant piece of editorial babble states: "Speculation that such donors might be looking to buy access to power have been at the heart of a series of scandals in recent years, such as cash for honours or cash for peerages."
That pathetic, naive sentence is followed up with this one: "If public suspicion grows, trust in politics is inevitably corroded in the end." Really?
Like all good card-carrying Keynesians, the writer then suggests the usual solution, more government intervention by taxing the public to pay for these circuses. Membership in both parties has declined over the years, the writer laments, implying that this is one of the main reasons.
Well, we have another suggestion, one we think much more germane, incompetence.
As with all politics--as most of us already know from long experience--big things always start out small. The sum put on each taxpayer, the writer projects, would be modest. Now there's an abstraction for you. Sure it would. For the nonce.
Then the editorial concludes with this gem.
If the political class at Westminster is to have any chance of winning back public trust, it needs to end the suspicion that the culture of political donation is corruptible. The only way to do this is a system of taxpayer funding that leaves the politicians at arms length from businesses and the unions.
There's at least three things amiss with this beauty.
To begin with, the Brits are masters of understatements. Next the public should be forced to pay up for honest politicians. Sounds a bit like sticking the horse behind the applecart. And finally, though it might remove them to arms length from businesses and unions, it puts then a hell of a lot closer to taxpayer purse strings.
Somehow that hardly sounds like a decent trade off.
That's our view. We hope you know yours.
TEARS, BOREDOM AND CENTRAL BANKS
Kudos to the Financial Times' James Mackintosh's "Short View" today on his point about economists never being renown for their writing style.
After plowing through 40 laborious pages of "dusty prose" from two central banks--the Fed 21 pages and the ECB 19--one can offer a serious suggestion about how to interrogate those captives at Guantanamo. Forget water boarding. Simply make them read these two works of economic pablum.
They'll tell you everything you want including forfeiting their first born.
To borrow a line from an old English professor who was, as he put it, sentenced after the age of 50 to an academic form of Dante's Inferno, reading freshmen papers, that "bore one to tears." In this case, tears is too generous, too kind.
Investors found market-moving information in the Fed's caution about raising rates while ignoring its long discussion about 'lift-off tools' it will use when it raises rates.
The ECB revealed that it was worried that the market would take it badly if the widely anticipated quantitative easing did not arrive, and that it upped it's proposed €50bn to €60bn, but for less time.
Central bank watchers revel in every dull sentence, and investors, plus the media, typically look in the minutes for an insight into policy mares' thinking. This is dangerous.
...the minutes are usually out of date. The last Fed meeting was before January's blowout jobs data, while the ECB's took place as market-based inflation expectations were rebounding (they have since dropped).
....they are little more than an extension of policy statements, not verbatim record of discussions. This is a form of propaganda, not a true insight. Serious disagreements may be visible in the minutes--but mostly would be obvious from public statements by individual policy makers long before the minutes were published.
Mackintosh further cites the unexpected or unknowns as when policy change their minds as happened in the Swiss National Bank debacle that few if any saw coming when banker suddenly undid the euro peg. It's valid point and further proves any claim to real transparency is just that, lip service.
Any credibility central bankers global wide enjoy depends on having a huge flock of lemmings. As Mackintosh writes: "....central bankers have little idea what they are likely to do than anyone else, as it depends on what happens in the economy--which they, like anyone else, are hopeless at forecasting.
Some clues to how they might react to new developments may be gleaned from the minutes, but most investors try to draw conclusions about how rates will move instead. Those who still believe the myth of central bank omniscience should look at their record."
Truth be told Mackintosh is only half correct in his assertion. Economists are renown for their distinct lack of writing style. Calling anything prose, dusty or otherwise, from that bleak quarter, is an act of magnanimity more befitting a saint.
After plowing through 40 laborious pages of "dusty prose" from two central banks--the Fed 21 pages and the ECB 19--one can offer a serious suggestion about how to interrogate those captives at Guantanamo. Forget water boarding. Simply make them read these two works of economic pablum.
They'll tell you everything you want including forfeiting their first born.
To borrow a line from an old English professor who was, as he put it, sentenced after the age of 50 to an academic form of Dante's Inferno, reading freshmen papers, that "bore one to tears." In this case, tears is too generous, too kind.
Investors found market-moving information in the Fed's caution about raising rates while ignoring its long discussion about 'lift-off tools' it will use when it raises rates.
The ECB revealed that it was worried that the market would take it badly if the widely anticipated quantitative easing did not arrive, and that it upped it's proposed €50bn to €60bn, but for less time.
Central bank watchers revel in every dull sentence, and investors, plus the media, typically look in the minutes for an insight into policy mares' thinking. This is dangerous.
...the minutes are usually out of date. The last Fed meeting was before January's blowout jobs data, while the ECB's took place as market-based inflation expectations were rebounding (they have since dropped).
....they are little more than an extension of policy statements, not verbatim record of discussions. This is a form of propaganda, not a true insight. Serious disagreements may be visible in the minutes--but mostly would be obvious from public statements by individual policy makers long before the minutes were published.
Mackintosh further cites the unexpected or unknowns as when policy change their minds as happened in the Swiss National Bank debacle that few if any saw coming when banker suddenly undid the euro peg. It's valid point and further proves any claim to real transparency is just that, lip service.
Any credibility central bankers global wide enjoy depends on having a huge flock of lemmings. As Mackintosh writes: "....central bankers have little idea what they are likely to do than anyone else, as it depends on what happens in the economy--which they, like anyone else, are hopeless at forecasting.
Some clues to how they might react to new developments may be gleaned from the minutes, but most investors try to draw conclusions about how rates will move instead. Those who still believe the myth of central bank omniscience should look at their record."
Truth be told Mackintosh is only half correct in his assertion. Economists are renown for their distinct lack of writing style. Calling anything prose, dusty or otherwise, from that bleak quarter, is an act of magnanimity more befitting a saint.
AROUND THE NET
http://www.marketwatch.com/story/us-stocks-futures-waver-ahead-of-greece-meeting-pmi-2015-02-20?
http://www.businessinsider.com/byron-wien-says-market-will-shock-2015-2
http://www.dnsrsearch.com/A//www.scott-mather-discusses-pimcos-total-return
http://www.marctomarket.com/2015/02/great-graphic-unexpected-results-of
http://www.bloomberg.com/news/articles/2015-02-20/yellen-confronts-economists-ignorance-as-she-weighs-higher-rate
http://www.businessinsider.com/its-time-to-break-up-with-american-express-2015-2
http://www.marketwatch.com/story/by-this-measure-winter-has-been-rather-warm-2015-02-19
http://wolfstreet.com/2015/02/19/french-investment-bank-what-the-ecb-has-to-do-to-prevent-a-market-meltdown
http://financialspuds.blogspot.com/2015/02/my-bias-or-yours.
http://www.businessinsider.com/bank-of-america-investor-flows-to-europe-2015-2?
http://www.reuters.com/article/2015/02/20/us-eurozone-greece
Thursday, February 19, 2015
AROUND THE WEB
Random Reads
japan-shares-hit-15-year peak
apnews.myway.com/us--lower gas prices-delayed spending
money.cnn.com/gallery/autos/2015/02/17/ultra-luxury-suv
www.reuters.com/article/2015/02/18/us-eurozone-greece
IMF aid package pushes Ukraine gas prices up 280%
central-banks-have-lost-control-world
ukraine-receives-eu-funds-to-block-asylum-seekers-from-reaching-europe
credit-suisse-low-expected-returns-in-stocks-2015
federal-reserve-interest-rates-language
is-warren-buffett-right-about-big-oil-stocks
Wednesday, February 18, 2015
MY BIAS OR YOURS
One chart doesn't a trend make or, for that matter, a trend reversal.
Here are two charts, however, that make for some interesting reading notwithstanding your bias. And recall everybody has one.
With energy some say the price of crude has further to fall while others argue an uptick to higher prices is near. So who will make the money here, the shorts or the longs?
The American Petroleum Institute today rattled markets with their crude oil supply numbers.
SAN FRANCISCO (MarketWatch) — The oil market got a bit of a shock late Wednesday, when the American Petroleum Institute’s supply data were released.
U.S. crude-oil supplies as of the week ended Feb. 13 saw a whopping 14.3 million-barrel jump from a week earlier, the trade group reported, according to news reports and various sources.
Analysts polled by Platts forecast an increase of just 3.1 million barrels for the week. Prices for March crude CLH5, -2.90% on the New York Mercantile Exchange dropped to $50.48 a barrel in electronic trading after the API data, down from a regular-session settlement of $52.14.
The market will have to wait for confirmation from the U.S. Energy Information Administration, which will release its weekly petroleum supply figures at 11 a.m. Eastern time on Thursday. Supply data are delayed by a day this week due to the Presidents’ Day holiday.
Everyone knows how far oil has dropped since mid-June. For more on its possible rebound read
marketwatch.com/story/if-history-is-a-guide-oil-could-rebound-in-may-2015-02-18
As we said earlier it's a matter of which bias one has.
Everyone knows how far oil has dropped since mid-June. For more on its possible rebound read
marketwatch.com/story/if-history-is-a-guide-oil-could-rebound-in-may-2015-02-18
As we said earlier it's a matter of which bias one has.
Tuesday, February 17, 2015
KEEP IN MIND IT'S AN OLD ONE
There's an addiction going on and it has little to do with street drugs although one might say in another way it has everything to do with a street drug.
It this case, it's a six-year addiction. And the drug of choice is low or near zero interest rates. While one of MSM's latest memes, besides the possibility of a Grexit, centers on when the Fed will start jacking up interest rates, it raises the issue of how far and for how long.
The second part of that question is, once started how many rate hikes will there be and over what time span? If history is any guide, taking the last 50 years or so, 26 months is the average once the hikes are underway.
The last time the Fed started raising rates was 11 years ago. They stopped two years later. Most of us know what followed, a financial crisis.
One of the problems with addictions is they're difficult to break. With investors of all sorts scrambling for yield the past several years, there's a ton of leverage in these markets. A cynic might even describe it as "scary leverage."
To be sure there are enough white hat boys and girls around to suggest otherwise. One thing looks fairly certain, central bankers are either going to be terribly wrong or terribly correct.
Those who believe the Fed will break the historical mode and tread more softly versus those who believe the Fed will return to business as usual so as not to toss any unexpected flies into the monetary ointment.
Business as usual just might turn out to be the exact opposite of what the market needs.
Just last week John Williams, head honcho at the San Francisco Federal Reserve Bank, a member some think is Chairwoman Janet Yellen's interest rate clone, warned that the time for higher rates is "closer and closer."
Anyone who pretends to know just how the market in general and investors in particular will react is doing just that, pretending. Keep in mind the S&P 500 suffered only one big break last October when it briefly--and that's the key term here, briefly--dipped below its 200-day moving average.
Keep in mind the S&P 500 eked out a small gain today to close at a record for the second time this year. Keep in mind despite all the hand-wringing about Greece and the Ukraine, there appears to be a large amount of complacency around.
If this were a three-card street shell game, one could say the marks are lining up. Just when they all get in place, well, we'll have to wait and see.
ENERGY TAKEOVER?
One of the possibilities we've mentioned since oil prices started their swoon mid-last year is takeovers.
As panic among investors sets in over the concern of where the oil price bottom will be, investors often forget that low prices make assets more attractive, increasing the chance for mergers and acquisitions.
Well, now rumors of such grow.
Shares of BP plc (NYSE: BP) spiked higher Thursday, on a report from the Wall Street Journal that ExxonMobil Corporation (NYSE:XOM) may be considering taking advantage of low oil prices and preparing to bid for companies struggling with the downturn. In addition to BP, Chevron Corporation (NYSE: CVX) was mentioned as a possible target.
And there will be more such stories. Low prices make certain assets attractive.
www.reuters.com/article/2015/02/16/us-japan-economy-gdp-
AROUND THE NET
RANDOM READS
us-eurozone-greece
singapore-turns-to-services-as-global-economic-outlook-weakens
money.cnn.comtechnology/bank-hack-kaspersky
wsj.com/articles/cleveland-fed-president-sees-june-rate-increase-as-viable-option
news/oil-prices-rise-further-analysts-
finance.yahoo.com/news/u-companies-avoid-slow-torture
businessinsider.com/us-consumers-are-spending-less-gas-savings-2015-2?
bespokeinvest.com/thinkbig/2015/2/16/key-etf-performance-through-presidents-day-2015.
http://www.mining.com/hedge-funds-in-gold-price-rethink
if-pfizers-right-hospira-biosimilar-gold-rush-begins-this-week
Sunday, February 15, 2015
AROUND THE NET
RANDOM READS
wsj.com/articles/deadline-for-greek-bailout-agreement-looms
www.reuters.com/article/2015/02/16/us-japan-economy-gdp
.singapore-s-property-market-mixes-best-and-worst-southeast-asia
marctomarket.com/what's driving the dollar
http://wolfstreet.com/2015/02/15/stock-market-leverage-intoxicates-politicians
Rio Wields Cash To Fend Off Swiss Suitor Barron's
theguardian.com/society/2015/feb/16/skunk-cannabis-triples-risk-psychotic-episodes-study
telegraph.co.uk/news/worldnews/islamic-state/11414868/Kayla-Muellers-boyfriend-she-told-the-truth-to-save-me.
http://www.nytimes.com/2015/02/16/world/europe/despite-truce-shelling-continues-in-parts-of-ukraine.
http://www.dpa-international.com/news/international/eurosceptics-win-seats-in-hamburg-election-merkels-party-takes-hit
profitsofchaos.com/2015/02/02/corporate-profits-noise-and-signal/
finance.yahoo.com/news/asia-shares-edge-greece-uncertainty-
moneymorning.com/ext/articles/rickards/cia-insider-breaks-silence-on-global-currency-wars-mobile-lead
247wallst.com/energy-economy/2015/02/15/could-oil-still-drop-to-20
http://www.latimes.com/world/europe/la-fg-kosovo-refugees-20150215-story.
GOLDMAN GOVERNMENT
Goldman Sachs should really be Goldman Government.
The list of central bankers and others with Goldman connections serving or having served in high government financial positions around the globe is long and lush--Carney, Draghi, Paulson, Rubin, Geithner, to name but a few.
So here's an idea from a recent Wall Street Journal article, "After Crisis, Goldman Goes It Alone," and "Regulation Is Good For Goldman" in same issue. Read both from a backdoor perspective as a conservative way to play a rebound in commodities.
If this seems like a paradox here you're getting warm.
And for that matter a bit of government backscratching for Goldman. To play pretend for a second, suppose deflation, a current meme that's just about as overdone in MSM as overdone gets, unexpectedly fizzles out and all that global fiat money printing leads to more inflation than central bankers want?
Oil isn't the only commodity down. Copper, iron ore and many others. Trading commodities is a big part of Goldman business. Now that many of the big banks have left the scene, what does Goldman know that others don't?
After all, we've had declining energy prices, a euro that recently hit a 10-year low and interest rates that if they get much lower they'll have to stand tippy-toe on the bottom just to try to touch the top.
Morgan Stanley is trimming the business, Goldman's stock is up 16% in last year, Morgan Stanley's up 23%. As the article noted commodity trading for Goldman brings in more revenue per employee than any of it's other activities.
At another point Goldman CEO Lloyd Blankfein stated with all of its competitors essentially either cutting back or abandoning their commodity trading desks, Goldman is now alone. Make of that what you want.
Here is a piece about Blankfein from celebritynetworth.com
Lloyd Blankfein net worth and salary: Lloyd Blankfein is an American finance executive who has a net worth of $500 million. Lloyd Blankfein is most known for being the chairman and CEO of Goldman Sachs. Prior to his career at Goldman, Lloyd Blankfein worked as a corporate tax lawyer for Donovan, Leisure, Newton and Irvine. Blankfein is one of the highest paid executives on Wall Street and regularly earns over $50 million per year in salary and bonuses alone. He also owns a significant number of Goldman equity.
http://www.celebritynetworth.com/richest-businessmen/ceos/lloyd-blankfein-net-worth
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